Every time I see an Occupy-related video, I see a strengthening case for the draft. This is coming from someone who considers himself a libertarian, so I'm amazed at what I'm saying. I imagine civilian life would suddenly look pretty darned good from inside a barracks. Maybe if growing up doesn't occur naturally, it should get an institutional jump-start.

Monday, January 30. 2012

... even after a massive tax increase Illinois is looking at a half a billion dollar deficit. That actually sounds manageable in the scheme of things -- not even a billion dollars, chump change in this inflation-ravaged world. But the annual deficit is less of a threat than all those accumulated liabilities: "Looking at the bigger picture, the state has a backlog of about $8.5 billion in unpaid bills and owes about $27 billion in outstanding bonds. And then there's the roughly $80 billion owed to the state's public employee pension funds."

The reported deficit, in other words, doesn't include all the stuff that should have appeared in past budgets but was hidden in order to get through the next election. How a state with a constitutional mandate to balance its budget can do this in the first place -- and how an "unpaid bill" can be excluded from the annual budget -- is a question for future prosecutors. But for investors it's a clear sign that some sort of default is coming.

Why then would anyone buy an Illinois municipal bond, or accept a state contract that requires future payments, or move a business to the state, or keep a business in the state, or do anything else that required faith in the willingness or ability of the state to pay its bills? The only possible answer is that Illinois isn't Greece; it's Spain or Italy, an entity so big and important that its failure is inconceivable. When it hits the wall, Washington will have no choice but to step in and cover its unfunded pensions and teacher salaries and muni bond interest. In the same way that a Spanish bond is really a German bond because Germany has no choice but to make good on it, the big insolvent US states are wards of the central government.

The bottom line effect of all this stepping up and bailing out is to exchange a solvency/debt crisis for a currency crisis in which the markets at some point figure out that failed states are so numerous and their needs so great that the printing presses will never stop.

Sunday, January 29. 2012

In his State of the Union address, Obama was not so keen on preaching austerity. As part of his plan to create an economy that is "built to last," he said it's necessary to "pay down our debt and invest in our future."

The phrase "invest in our future," we regret to report, is Washington-speak for "spend money." And in the current fiscal context, that means "spend money we don't have."
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The excuse that we are "investing" in the future has been used way too often to excuse fiscal bloat. The best investment in our future is to lighten the burdens that will fall on the taxpayers of tomorrow.

For that matter, the promise to "pay down our debt," which the president made twice in his address, is false. Republicans and Democrats are not arguing about how to pay down debt. They're arguing about how quickly or slowly we will continue to accumulate debt.

Obama says he wants to foster the long-term health of the economy. But it looks as though Washington's habit of living beyond its means is built to last.

Saturday, January 28. 2012

By the time [Wayne] Watson left his job as chancellor of City Colleges of Chicago in 2009, he had accrued around 500 unused sick days over his three-decade career with the community college system.

While many public and private employers have a "use-it-or-lose-it" policy on sick time, City Colleges converted Watson's unused days into cash -- a whopping $500,000 that's being paid to him in five annual increments, the Better Government Association has learned.

Watson, who now serves as president of Chicago State University, may be the largest recipient of sick-day payouts at City Colleges in recent years. What's more, the combination of his City Colleges sick-day payout, current salary from Chicago State and annual pension means Watson takes in nearly $500,000 annually in government payments.

But he's far from the only recipient of this taxpayer-funded largesse.

The college system owes about 140 former union and nonunion employees a collective $4.2 million in unused sick time, according to records provided by City Colleges to the BGA.
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Meanwhile, at least 15 other former City Colleges administrators were owed $100,000 or more in sick-time payouts over the past decade or so, records show.

For example, Charles Guengerich, former president of Wilbur Wright College on the Northwest Side, is slated to receive $309,061 in sick time. Martin Faber, former executive director of business services at Richard J. Daley College on the Southwest Side, is expected to receive $216,973.

City Colleges has about 120,000 students at seven main campuses, and an annual budget of more than $650 million.

The graduation rate -- which charts students getting a two-year degree within three years -- was 8 percent this past year, [City Colleges Vice Chancellor Laurent] Pernot said.

Friday, January 27. 2012

Almost a year after Illinois' record income tax increase, the state's unemployment woes contrast starkly with the slow but positive national economic recovery. Unemployment rates in 46 states dropped since January 2011, and some dramatically. Illinois' unemployment rate, on the other hand, was 9.8 percent in December, up from 9 percent in January 2011. Simply put, Illinois placed more people on the unemployment rolls than any other state in the country.

On a related note, I was watching IL Gov. Pat Quinn on MSNBC's Morning Joe program this morning and noted that Gov. Quinn talked of the state's 'investment in educational spending' being an important part of recovery. However, an examination of education spending in Illinois reveals that huge portions of overall spending, and majority portions of new education spending are going not to classroom spending, but to funding for teacher pensions.

Thursday, January 26. 2012

... even as the red-blue division grows more entrenched and bitter, it is becoming less relevant. The blue model is breaking down so fast and so far that not even its supporters can ignore the disintegration and disaster it now presages. Liberal Democrats in states like Rhode Island and cities like Chicago are cutting pensions and benefits and laying off workers out of financial necessity rather than ideological zeal. The blue model can no longer pay its bills, and not even its friends can keep it alive.

Our real choice, however, is not between blue or pre-blue. We can't get back to the 1890s or 1920s any more than we can go back to the 1950s and 1960s. We may not yet be able to imagine what a post-blue future looks like, but that is what we will have to build. Until we remove the scales from our eyes and launch our discourse toward the future, our politics will remain sterile, and our economy will fail to provide the growth and higher living standards Americans continue to seek. That neither we nor the world can afford.
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In any event, there is no going back to blue, and using public resources to try to prop up the old system is a waste of those resources and a hurtful diversion from the need to figure out what we need to do next. Europe's challenges are complicated mightily by an unfinished and perhaps impossible federal project (too large a subject to analyze here in depth). American society, for its part, must move beyond the increasingly dysfunctional and outdated ideas of 20th-century liberalism. If we don't, economic decline and social stagnation will undercut our prosperity, endanger our liberty and undermine our international power and domestic security. That is a future no true liberal could love.
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As long as the Federal government can print money and find lenders to buy its bonds, it can bleed slowly. It can watch its fiscal position erode gradually, and only gradually become less effective and popular. But state and local governments increasingly need vast transfers of cash from the Federal government to keep their blue noses above the rising tide. The stock market declines after September 2008 wiped out huge chunks of the wealth that state pension systems needed to have even a hope of paying the pensions promised to government retirees under terms more generous than virtually any private employers now provide. California and New York are headed over the cliff without Federal bailouts, and others are following close behind. That is why a substantial share of the Obama Administration "stimulus" spending was targeted less at New Deal-era infrastructure projects than at simply keeping unsustainable state bureaucracies and systems afloat for a few months or years longer.
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The collapse of a social model is a complicated, drawn out and often painful affair. The blue model has been declining for thirty years, and the final bell has not yet tolled. But toll it will, and as the remaining supports of the system erode, slow decline and decay is increasingly likely to give way to headlong crash. That may be happening now; the financial mess that came upon us in the fall of 2008 may be both symptom and accelerant (not cause) of the basic problem.

Saturday, January 21. 2012

The issue of crony capitalism should be front and center in this campaign. President Obama defends his cronies instead of the so called 99 percent. That's his contradiction. Big Labor, Big Business and Big Green Energy are collections of cronies with big jobs, big salaries and big privileges. Nothing to do with the 99 percent.

But Romney can go even further to slam crony capitalism. This is where tax reform and deep spending cuts come in. A flattening of tax rates should be accompanied by the elimination of cronied tax deductions, exemptions and carve-outs. Even more, we should get rid of crony corporate welfare wherever it exists, including crony government subsidies to energy, exports and agriculture. Wherever it exists.

... why aren't we more worried about Illinois? It's more or less the same size as Greece, its finances are in the same generally catastrophic shape, and its leaders are just as feckless and dishonest. It owes tens of billions of dollars to various investors and stakeholders and will clearly have to stiff many of them at some point.

Tuesday, January 17. 2012

What Valerie Jarrett does best is represent the Obama administration in microcosm. She embodies its insularity, its cronyism, its cluelessness. Born in Iran to a prominent African-American family from Chicago, she took degrees at Stanford and Michigan Law. She worked briefly as a corporate lawyer but hated every moment. So she decided to "give back," which is Chicago code for cashing in. She campaigned for Harold Washington, Chicago's first black mayor, and worked for him in the corporation counsel's office. Washington died in 1987, but Jarrett remained in government, working for his successor, Mayor Richard M. "Richie" Daley, son of legendary boss Richard J. Daley. It was all upward from there.

... every age and nation is hampered by utopians who support ignoring the prior experiences of humanity, and because of their ignorance, they believe they are cutting-edge.... The utopians appear in the Bible -- a book presently neglected by most socialists -- as false prophets; utopians generally appear everywhere, and probably began preaching shortly after man cultivated farmland. And this isn't important just as a general observation: ignorant men attempting to transcend natural law is the primary -- the only-- struggle of human society; what could be more important than that?
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Utopian thinking has never represented brilliance or historical greatness; if it did, there wouldn't be utopians in every age and nation and we wouldn't be littered with the evidence of their perfect failure rate. Utopianism instead represents the simplest of philosophical thinking: trying to make survival easier not with innovation but with brute force. Indeed, a defining characteristic of utopian thought is neglect of the math and economics of the idea -- details for the philosopher class to hammer out later while the leader poses for portraits.